Can trend trading control the weakness of human nature

As soon as you see this title, you must be very familiar with it. Today I will talk about this ancient and controversial topic to communicate with you. The famous commodity trading king Dennis Gartman said a very interesting saying: "I like the curve to move from the lower left to the upper right". Both ordinary and expert traders like this feeling, but can you control this trend?

It is not easy to do a good job of trend following. It's not just about finding good investments, but it's about using rules and techniques to manage the risks associated with investing. This may sound simple but is not a strategy, but in fact it is a rather complex and multi-dimensional investment strategy.

Here I must say that I am not a pure trend trader. I don't think any two investment environments are alike, and markets are highly inefficient. Therefore, I will take a compound strategy. Just because a strategy works in a bull or bear market doesn't mean it works in another market in the same environment. It can be seen that the transaction requires a lot of flexibility to adapt to the new environment, which is the so-called adapting measures to local conditions.

Before I had a complete knowledge system many years ago, like most traders, I was very thirsty for knowledge about trading, but unfortunately I failed repeatedly. So I, like many people, looked for various investment masterpieces to see if I could find the holy grail of trading. After a cursory reading of some classic books, I found that their authors are indeed outstanding, and some of the views expressed in the books have also changed my views on investment, and I seem to have found some holy grails.

Trend trading is not as simple as drawing a curve on a chart and hoping it keeps moving from lower left to upper right. Trend following requires us to study the history of market fluctuations, formulate the rules of the game, establish rules, and then learn to use these rules.

In addition, it has a more important aspect that investors who use trend following understand the importance of market psychology. What I want to emphasize here is that the market is the sum of the decisions of different investors. If market participants are inefficient, then the market is also inefficient. Therefore, whoever can control his emotions well has a decisive advantage. Let me share with you a sentence that Carver said so that everyone can understand this sentence more deeply: "Trend trading is not a holy grail, nor is it a short-term fad. Apart from those operating rules, human nature is the core of this strategy. Through self-discipline Trend trading with emotional control is what allows us to survive the inevitable market volatility. But remember, trend traders expect market volatility because they have planned for it in advance.”

The 2008 financial crisis must have been known to many investors, and this is an opportunity to fully demonstrate irrational investors. Before this crisis, the wolves of Wall Street gave about 95% of the stocks with buy ratings, and about 5% of the stocks were sold. One can imagine the ending of most investors. They don't want you to know when to buy and when to sell. Trend following not only helps investors decipher the correct timing to buy, but it also helps you manage risk, develop a systematic approach, and decide when to sell.

There is a proverb that everyone is very familiar with, "If you don't make it, you will lose it." The reason why trend traders can succeed is not only to have a reasonable risk control for investment products, but also to strictly abide by the trading rules. Of course, you don’t have to be a trend trader to be successful on the trading road, but you must pay attention to the importance of risks, and at the same time establish and formulate rules and plan ahead, otherwise you will undoubtedly fail.